Democratizing tanker stocks weekly (Part 1: Preface)

Oil prices can sometimes be the leading indicator of oil demand and shipments. Since the beginning of July, tanker companies such as Tsakos Energy Navigation Ltd. (TNP), Teekay Tankers Ltd. (TNK), Frontline Ltd. (FRO), and Nordic American Tankers Ltd. (NAT) as well as the Guggenheim Shipping ETF (SEA) have risen on the back of higher oil prices. Last week, we saw a pull-back as oil prices did as well. But have the long-term fundamentals changed?

Investors expect certain industries within shipping to recover later this year or next year. But are we seeing new developments, such as the supply and demand outlook, that will change the fundamental short-term outlook of the tanker industry? Let’s take a look at last week, the week of July 26, new data releases for:

The supply and demand of ships are the most important factors that affect shipping rates, which in turn affect earnings and share prices in a highly commoditized industry such as shipping. Unlike Samsung and Apple, which have features that set them apart from each other beyond price (think design, versatility, and compatibility), the shipping industry offers little differentiation between companies, so shipping firms rely most on rates. That’s why supply and demand are so important in the industry, because they affect shipping rates. When supply growth outpaces demand, competition among shipping firms rises, which leads to lower shipping rates. On the other hand, if supply growth can’t meet demand growth, customers will have to pay higher rates to transport goods across the ocean. The latter case is negative for customers but positive for dry bulk shipping firms, because it increases profitability. Higher profitability will often drive share prices higher.

To help us personalize your experience, which of the following best describes you?

Financial Adviser

Investment Professional

Individual Investor

What is the approximate total amount of the assets under your advisement?

Less than $25 million

$25 million to $99 million

$100 million to $499 million

$500 million or greater

What is the approximate amount of your firm's total assets under management (AUM), if applicable?

Less than $25 million

$25 million to $249 million

$250 million to $999 million

$1 billion to $9.99 billion

$10 billion or more

Don't know

Not applicable

What is your total amount of investable assets?

Less than $25,000

$25,000 to $99,999

$100,000 to $249,999

$250,000 to $999,999

$1 million or greater

Prefer not to say

Thank you!

x

There are no shortcuts to investing.

But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.

We think so too.

There are no shortcuts to investing. But if everyone had access to the trade secrets the top 10% of hedge fund managers use, their retirement path to wealth would be clearer. Enter your email address to discover how in our Market Realist Chronicles newsletter. You’ll receive must-know market insights straight from our former hedge fund manager, who managed $1 billion and made $2,000 an hour in the market, and his team of unbiased professional analysts.

Customize your experience.

Complete your registration by adding a password and customizing your Market Realist experience. You’ll quickly create a watch list to track the stocks and ETFs that matter most to you and your portfolio.